New Paper: How the World Can Finance the SDGs

How can the world finance the Sustainable Development Goals (SDGs)?

This question is at the centre of global efforts to achieve the SDGs. And so it is at the core of how the business community approaches the Global Goals. Our report Ideas for Action For A Long-Term And Sustainable Financial System outlines the answer to this question.

On the one hand, financing the SDGs shouldn’t be all too difficult. After all, the SDGs require a mere $2-3 trillion of additional investments per annum, out of a global GDP of approximately $115 trillion. This should be manageable, especially given what achieving the SDGs would mean for unleashing human and economic potential and ensuring planetary safety.

At the same time, however, financing the SDGs is a complex task. It would require an unprecedented coordination between public sector organisation and private institutions. It would require significant reform to global financial regulation and financial institutions. And it would require a meaningful commitment from all corporations – large and small – to tackle the challenges outlined by the SDGs.

In order to make sense of this task, the Finance Working Group of the Business and Sustainable Development Commission (BSDC) is releasing a short paper on what it sees as the major challenges for the financial system to overcome. Co-authored by Hendrik du Toit, CEO of Investec Asset Management, Mark Wilson, CEO of Aviva, and Aniket Shah, Programme Leader of Sustainable Finance at the UN SDSN, the paper argues that the financial system must be oriented towards long-term and sustainable outcomes. For this to happen, it identifies five areas of specific focus: aligning financial regulation with sustainable development, standardising and mandating sustainability reporting for corporations, getting sustainable infrastructure investment right, supporting the formation of long-term pools of risk capital and supporting financial innovation that accelerates inclusion. For each area of focus, the paper outlines key areas of recommendation for regulators and business leaders in the financial industry to take forward.

The global business community has at least two roles in the creation of a financial system aligned with sustainable development. The first is to do what businesses do best – innovate, create and build. New financial products, instruments and technologies are needed at all scales for the SDGs to be financed. And secondly, business must advocate for, and work with, governments to make the needed reforms to the financial system so that it can more effectively link global saving for the global investment needs.

Orienting a complex global financial system towards long-term outcomes will not be an easy task. But it is possible. Regardless, it is necessary. Without additional investment, public and private, the SDGs will not be met.